Benefits of Filing Income Tax Returns Early | AU Small Finance Bank
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What Are the Benefits of Filing Income Tax Returns Early?

    Filing income tax returns is an annual duty that citizens need to diligently fulfil for ensuring smooth governance. Early filing of income tax returns saves you from the last-minute rush or any issues that might occur nearer to the deadline.

    It is important to know the benefits of filing a tax return before the due date. Some of the major benefits of filing income tax return early are mentioned hereunder:

     
    • Quick Processing of Refund

    The earlier you file your income tax return, the sooner you can verify it and keep the same ready for refund processing. So, why delay in filing your income tax return.

     
    • Avoid Penalties and Interest

    Late filing of income tax return attracts penalty under section 234F of the Income tax Act. In case the income tax return is filed after the due date, an individual is required to pay INR 5,000 as penalty. However, if the annual income of an individual does not exceed INR 5 lakh, the penalty shall not exceed INR 1,000.

    Further, Interest u/s 234A at the rate of 1% p.m. is also applicable in case the return is filed after the due date and the tax liability is outstanding.

     
    • Avoid Defective Return Notice

    Chances of making a mistake increases when the return is filed at the last minute. In this regard, the IT department may issue a Defective Return Notice under Section 139(9) of the IT Act, asking for a reason for the mismatch. Not attending to such notices can attract heavy penalties. 

     
    • Helps in Easy Loan Approval & Visa processing

    Banks and NBFCs need you to provide your last three years’ income tax returns when you apply for a Home Loan or Vehicle Loan. Filing income tax returns on time reflects on your credibility as a loan seeker and helps in easy loan approval. Also, you must provide your income tax returns for your Visa processing, as the documents indicate your credibility and financial stability.

     
    • Carry forward the losses

    If you are a businessman, filing tax returns before the due date lets you carry forward your losses incurred to the following years. You can offset your losses against the income in the succeeding years.

     
    • Beneficial for immovable property registration

    Some of the states in India need individuals to provide IT returns of the previous three years for immovable property registration. So, the ITR documents serve as evidence to justify the property or wealth you own.

     

    How early can you file your taxes?

    You must file your tax returns as soon as your income documents, investment proofs and tax payment/deduction details for the assessment year are ready and the income tax return forms are notified by the Government on the portal.


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